As the battle for AI supremacy intensifies between the world's two largest economies, analysts say investors focused solely on U.S. tech stocks risk overlooking a critical hedge hiding in plain sight.

In a recent research report, Henry Wu, chief quantitative strategist at Alpine Macro—a firm owned by Oxford Economics—said investors piling into U.S. AI giants like Nvidia Corp. (NASDAQ:NVDA) are overlooking a growing geopolitical risk and missing a crucial China hedge that could protect their portfolios.

Why Diversifying AI Bets May Be Smarter Than Going All-In On The US

The AI boom may be global, but the risks are not evenly distributed.

According to Wu many U.S.-listed AI names still derive a meaningful chunk of demand—over 15% in Nvidia's case—from China, even through unofficial or gray-market channels.

But with China accelerating its push for full-stack self-sufficiency and the U.S. tightening export controls, the foundations of that demand are cracking. ...